New tax exemptions for employer-refunds of coronavirus tests

"The Government is to introduce a temporary income tax exemption and National Insurance contributions (NICs) disregard, to ensure that employees who purchase their own Coronavirus swab tests, and are reimbursed by their employer, will not attract income tax and NICs liabilities in the current tax year.

"A Coronavirus swab test means a test which detects the presence of a viral antigen or viral ribonucleic acid (RNA) specific to severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2).

"Under normal tax rules, the cash reimbursement of a test by an employer to an employee, would constitute earnings, and the amount reimbursed would be subject to income tax and Class 1 NICs as a result.

"This measure allows employees to access a Coronavirus swab test, outside of the national testing programme, for business reasons without attracting income tax and NICs liabilities, for example if an employee needs a negative test result in order to travel abroad for business.

Further information about this measure will be published shortly on GOV.UK"

We look forward to sharing more detail (particularly on the period that the exemption will cover) in due course. 

Existing HMRC guidance confirms that tests paid for directly by the employer and provided by the employee (rather than sourced and paid for by the employee, then reimbursed by the employer as above) are already exempt from income tax and national insurance.